Adjusted Trial Balance

An adjusted trial balance is prepared after adjusting entries are made and posted to the ledger.
This is the second trial balance prepared in the accounting cycle.
Its purpose is to test the equality between debits and credits after adjusting entries are entered into the
books of the company.
To illustrate how it works, here is a sample unadjusted trial balance:

Gray Electronic Repair Services

Unadjusted Trial Balance
December 31, 2014
Account Title
Cash
Accounts Receivable
Service Supplies
Furniture and Fixtures
Service Equipment
Accounts Payable
Loans Payable
Mr. Gray, Capital
Mr. Gray, Drawing
Service Revenue
Rent Expense
Salaries Expense
Taxes and Licenses
Totals

Debit
$ 7,480.00
3,400.00
1,500.00
3,000.00
16,000.00

Credit

9,000.00
12,000.00
13,200.00

7,000.00
9,550.00
1,500.00
3,500.00
370.00
$ 43,750.00 $ 43,750.00

At the end of the period, the following adjusting entries were made:
Dec 31 Accounts Receivable

300.00

Service Revenue
31 Utilities Expense

300.00
1,800.00

Utilities Payable
31 Service Supplies Expense
Service Supplies

1,800.00
900.00
900.00

31 Depreciation Expense
Accumulated Depreciation

720.00
720.00

After posting the above entries, the values of some of the items in the unadjusted trial balance will
change. Take the first adjusting entry. Accounts Receivable is debited hence is increased by $300.
Service Revenue is credited for $300.
The balance of Accounts Receivable is increased to $3,700, i.e. $3,400 unadjusted balance plus $300
adjustment. Service Revenue will now be $9,850 from the unadjusted balance of $9,550.
Next entry. Utilities Expense and Utilities Payable did not have any balance in the unadjusted trial
balance. After posting the above entries, they will now appear in the adjusted trial balance.
Third. Service Supplies Expense is debited for $900. Service Supplies is credited for $900. The Service
Supplies account had a debit balance of $1,500. After incorporating the $900 credit adjustment, the
balance will now be $600 (debit).
And fourth. There were no Depreciation Expense and Accumulated Depreciation in the unadjusted trial
balance. Because of the adjusting entry, they will now have a balance of $720 in the adjusted trial
balance.

Adjusted Trial Balance Example

After incorporating the adjustments above, the adjusted trial balance would look like this. Just like in the
unadjusted trial balance, total debits and total credits should be equal.

Gray Electronic Repair Services

Adjusted Trial Balance
December 31, 2014
Account Title
Debit
Credit
Cash
$ 7,480.00
Accounts Receivable
3,700.00
Service Supplies
600.00
Furniture and Fixtures
3,000.00
Service Equipment
16,000.00
Accumulated Depreciation
$
720.00
Accounts Payable
9,000.00
Utilities Payable
1,800.00
Loans Payable
12,000.00
Mr. Gray, Capital
13,200.00
Mr. Gray, Drawing
7,000.00
Service Revenue
9,850.00
Rent Expense
1,500.00
Salaries Expense
3,500.00
Taxes and Licenses
370.00
Utilities Expense
1,800.00
Service Supplies Expense
900.00
Depreciation Expense
720.00
Totals
$ 46,570.00 $ 46,570.00